3rd Apr 2014 08:47
LONDON (Alliance News) - Homesware retailer Dunelm Group PLC Thursday reported strong sales growth for the third quarter, albeit at a slower pace than in the prior year, as it continues to invest in its in-store offer, store expansion, and improving its multi-channel offering.
Dunelm, which trades under the brand name Dunelm Mill, said total sales in the 13 week period ended March 29 rose 9.9% to GBP195.4 million, up from GBP177.8 million the prior year, with like-for-like sales growth of 5%.
Dunelm floated at the end of 2006 and almost immediately faced dramatic falls in UK consumer confidence. However the retailer held up reasonably well, and now investments in brand awareness and in launching its first ever TV ad campaign have helped the retailer increase sales.
It said like-for-like sales growth in the quarter were boosted by its ongoing investments which have strengthened its customer proposition and driven sales, as well as no disruptions to its stores caused by snow, which hit sales this time last year.
For the 39 weeks to March 29, Dunelm said that total sales increase 6.5% to GBP551.7 million, compared with GBP517.9 million a year earlier, and rose 1% on a like-for-like basis.
Despite the strong sales growth, Dunelm said that sales grew at a much slower pace than the same periods a year earlier.
Dunelm said that it improved its gross margin in the third quarter by 100 basis points, which it said was driven partly by direct sourcing activity. It said that it expects margin growth to continue over the reminder of the financial year.
The company has been investing in its multi-channel offer, particularly in fulfilment, and with an improving macro-economic environment in the UK, it said it should benefit.
"These include ongoing development in multi-channel, the further roll-out of our Dunelm At Home proposition, enhanced customer service training, continuation of TV advertising and an expanded spring catalogue," the company said in a statement.
It introduced a three-hour check-and-reserve promise, reducing the time between a customer placing an order and collection to only three hours, which is a key competitive advantage for the retailer.
Dunelm has said that it now plans to invest roughly GBP7 million, GBP2 million of which incurred in the first half, in its multi-channel offer, including re-platforming and a new website, expected to be launched in the first quarter of the next financial year.
Dunelm said that it has opened a total of 10 superstores in the financial year to date, four of which were opened in the third quarter, including one relocation of an existing under-sized superstore, and one superstore which replaces two high street shops that have been closed.
"We remain committed to achieving a mature UK superstore portfolio of approximately 200 stores in the medium term," the company said at the time of its half-year results, and said Thursday that its superstore portfolio at the end of the current financial year will be 136 stores.
In terms of infrastructure, the retailer has also spent money this year on upgrading its core systems platform and its in-store point-of-sale system during 2013, enabling it to improve stock control and make in-store processes more efficient.
"Our next key development will be to transition our website to a new software platform; we expect to complete this project in summer 2014," the company said.
The group said that it remains strongly cash generative, with closing net cleared funds at bank of GBP57.3 million.
Dunelm shares were trading 2.4% higher Thursday morning at 995.25 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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